Just because the “big deal” didn’t happen as a result of the recent, marginally extra-constitutional shenanigans, that doesn’t mean that Congress doesn’t still have to come up with a plan. And the “go big” theme is far from dead among the chattering class. In fact, New York Times economist Paul Krugman has once again demonstrated the benefits of a classical education and come up with yet another path to prosperity. In this version, he seems to have abandoned the idea of going back to Clinton era tax rates for the wealthy. That won’t be able to fix the problem, as many conservatives have already noted.

The supercommittee was a superdud  and we should be glad. Nonetheless, at some point well have to rein in budget deficits. And when we do, heres a thought: How about making increased revenue an important part of the deal?

And I dont just mean a return to Clinton-era tax rates. Why should 1990s taxes be considered the outer limit of revenue collection? Think about it: The long-run budget outlook has darkened, which means that some hard choices must be made. Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s?

Strangely, Krugman goes a long way toward defeating his own argument a few paragraphs later, noting that under his staggeringly optimistic estimate, a truly massive marginal tax rate on those earning more than $2M per year could shave “as much as” $100B per year off of the deficit. I’m not saying that $100B is anything to sneeze at, but it’s still a relatively paltry fly swatter with which to attack the current deficit monster. And while I’m one of the unpopular people who admit that any sort of salable final deal will likely require some significant revenues in addition to bringing down spending dramatically, it’s hard to imagine picking a worse target for the federal government’s wrath.

But yet again, as Noel Sheppard notes, the bigger picture requires a focus on something different. Also known as… it’s the spending, stupid.

As I’ve noted many times in the past, if we had only grown our total expenditures at the rate of inflation since 2007, we would have had a $413 billion deficit in the just-ended fiscal year 2011. This would be even lower in the current year given projections of $2.9 trillion in unified tax receipts.

When you consider that total unified outlays in 2007 – before the Democrats took over Congress! – were $2.7 trillion, and that they rose to a staggering $3.8 trillion in just four years or 41 percent, it’s just absurd to blame our fiscal woes on revenues.

But we’ve grown accustomed to this in the past couple of years, especially from arithmetically-challenged Nobel laureates like Krugman.

Some lessons apparently take a very long time to learn. But with luck, we’re getting there.

In 2009, we had income tax revenues of about 1.0 - 1.1 trillion dollars.

If we doubled - DOUBLED - everybody’s (that every single tax payer’s) rates, we’d only get (on static analysis) another 1.0 - 1.1 trillion, not enough to cover that year’s deficit. And of course we’d destroy what’s left of the economy.

Can someone please figure out a way to explain that simply enough so that even a Nobel Prize laureate can understand it? The problem is NOT revenue. The problem is *spending*. The problem is Obama, democrats and pinheads like Krugman.

It’s the liberals vs the progressives (both are socialists). The liberals are tax and spenders. The progressives are spend and taxers. Both are driving the bus off the clift. Krugman and his socialist friends at the NY times are the cheerleaders. Ray-Rah-Ree Kick US in the knee!

Krugman knows very well what he is proposing will have no real effect on the deficit. So do most others of his ilk. They don't give a damn about the deficit or about public debt - and many have even argued that in essence, they don't matter.

It's not about the money - it's about POWER.

10
posted on 11/28/2011 8:17:55 AM PST
by andy58-in-nh
(America does not need to be organized: it needs to be liberated.)

It would be simpler to just shoot everybody with a net worth of over $100K and confiscate their assets. That’s exactly where’s Krugman and his ilk are taking us, anyway - why waste time on the preliminaries?

What’s the difference between a turkey and former Enron adviser Paul Krugman? One of them is flightless, has a tiny brain, spends all day squawking and gobbling; making a mess wherever he stands and the other you eat for Thanksgiving.

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